Correlation Between Qudian and Portman Ridge
Can any of the company-specific risk be diversified away by investing in both Qudian and Portman Ridge at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Qudian and Portman Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qudian Inc and Portman Ridge Finance, you can compare the effects of market volatilities on Qudian and Portman Ridge and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Qudian with a short position of Portman Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qudian and Portman Ridge.
Diversification Opportunities for Qudian and Portman Ridge
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Qudian and Portman is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and Portman Ridge Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portman Ridge Finance and Qudian is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Qudian Inc are associated (or correlated) with Portman Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portman Ridge Finance has no effect on the direction of Qudian i.e., Qudian and Portman Ridge go up and down completely randomly.
Pair Corralation between Qudian and Portman Ridge
Allowing for the 90-day total investment horizon Qudian Inc is expected to under-perform the Portman Ridge. In addition to that, Qudian is 2.47 times more volatile than Portman Ridge Finance. It trades about -0.11 of its total potential returns per unit of risk. Portman Ridge Finance is currently generating about -0.19 per unit of volatility. If you would invest 1,764 in Portman Ridge Finance on August 27, 2024 and sell it today you would lose (75.00) from holding Portman Ridge Finance or give up 4.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qudian Inc vs. Portman Ridge Finance
Performance |
| Timeline |
| Qudian Inc |
| Portman Ridge Finance |
Qudian and Portman Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qudian and Portman Ridge
The main advantage of trading using opposite Qudian and Portman Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qudian position performs unexpectedly, Portman Ridge can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Portman Ridge will offset losses from the drop in Portman Ridge's long position.The idea behind Qudian Inc and Portman Ridge Finance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Portman Ridge vs. Logan Ridge Finance | Portman Ridge vs. MFS Investment Grade | Portman Ridge vs. Eaton Vance National | Portman Ridge vs. WhiteHorse Finance |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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